In general, paying your car insurance premium annually instead of monthly is the most affordable option. Providers will incur processing costs if you pay your premium in installments, and those costs are included in your monthly payment. Most insurers offer a discount if you pay in full because that way they keep your costs low. Paying your insurance premiums annually is almost always the least expensive option.
Many companies offer a discount for paying the entire policy, since it costs the insurance company more if the policyholder pays their premiums monthly, since that requires manual processing every month to keep the policy active. Finally, it's worth noting that most auto insurance quotes are based on a six-month policy that is paid in full at the beginning of each period. However, if you compare the price of your car insurance on a monthly basis, there might not be much difference between a six-month policy and a 12-month one. Six-month car insurance might be better if you have a traffic violation or some points on your license that will expire soon.
Some insurance companies still offer annual policies, along with a 6-month option, such as Liberty Mutual, USAA, Erie, The Hartford, The General, Infinity, Sfeco and Unique. The length of the policies is specific to each company; some companies can only offer car insurance for six months, while others only offer 12-month terms (and some may give you the option to choose either one). A 12-month car insurance policy tends to be more secure, since overall car insurance rates tend to rise over time. Buying a 12-month car insurance policy is better than buying a 6-month car insurance policy if you're a good driver with a clean driving record and the option is available to you.
Auto insurance companies use the information in your credit report to calculate your interest rate, and the less debt you have according to your report, the better your credit situation will be. All insurance products are governed by the terms of the applicable insurance policy, and all related decisions (such as coverage approval, premiums, fees and charges) and policy obligations are the sole responsibility of the insurance insurer. As executive vice president of Lending & Insurance Solutions, Ty Harrison leads teams of lending and insurance professionals dedicated to offering value-added programs, services and technology designed to address the needs of lenders, loan servicers, portfolio managers, mortgage brokers, insurance agents and insurance brokers. On the other hand, a 12-month policy may offer the cheapest car insurance for some, as it avoids the risk of premiums rising twice a year.
How often you pay your car insurance premiums depends on the company and your preferences, but annual or semi-annual payments are best. A six-month auto insurance policy simply means that your policy is effective and priced for six months before it is renewed. However, you can usually buy a six- or 12-month policy and cancel it in the medium term if you no longer need coverage or if you've replaced your car insurance with another provider.